HEARINGS ON SDG&E’S FIRE COSTS PLAN ARE THIS WEEK

The public will have its say on Thursday regarding San Diego Gas & Electric’s proposal for recovering costs from catastrophic 2007 wildfires — triggered in large part by the company’s power lines.

State utilities regulators will gather comments at two public hearings in Clairemont Mesa on SDG&E’s request for standardized policies and procedures for recouping fire costs beyond insurance coverage.

At stake in the proceedings before the California Public Utilities Commission is who ultimately pays for the fires’ destruction — utility customers or shareholders.

Three wildfires in October 2007 destroyed more than 1,300 homes and killed two people in northern San Diego County. Fire costs have surpassed $2 billion, exhausting the utility’s fire insurance and counter claims.

If its cost-recovery framework is approved, SDG&E could be eligible to recoup from ratepayers at least 95 percent of those excess wildfire and related litigation costs in which the utility did not intentionally ignore safety measures.

Shareholders in Sempra Energy could shoulder up to 5 percent of costs in which the utility bore some responsibility — with a 12-month cap of $30 million.

An alternative would divide the costs on a 90-10 basis between customers and investors, with no review of fault for the fires.

The plan would also apply to insurance shortfalls in future fires, and extend to SDG&E affiliate Southern California Gas.

SDG&E spokeswoman Stephanie Donovan said, “Thursday’s hearings are really all about hearing from San Diego about the 2007 fires and how those costs should be recovered.”

With or without the requested Wildfire Expense Balancing Account, SDG&E still can seek to recover uninsured wildfire costs through utility rates while justifying those expenses on each occasion.

SDG&E and other utilities assert that state court rulings have effectively turned them into underwriters for fire insurance.

Forced to serve customers in fire-prone areas, California’s electrical utilities can be held liable for fires triggered by equipment — even when compliant with safety regulations.

Without clear provisions for passing on those costs, the company says, the utility’s future financial health is threatened.

The arguments are galling to plaintiffs still pursuing 2007 fire claims against SDG&E.

“It would be a travesty to discuss ratepayers paying for this, including ratepayers who have lost their homes (to the fires), before they have received any compensation” through legal proceedings, said Mitch Wagner, one of three attorneys still representing claims tied to 170 properties.

Two state investigations found that SDG&E lines, and to a lesser degree Cox Communications equipment, caused the 2007 fires, which spread quickly under dry conditions and gusting Santa Ana winds.

San Diego Gas & Electric denies it was ever at fault, but apologized previously for obstructing investigators looking into the root causes. In 2009, SDG&E agreed to pay $14.4 million to the state’s general fund to settle accusations that shoddy maintenance led to the blazes.

Thursday’s hearings will be conducted by utilities commission Administrative Law Judge Maribeth Bushey, who will eventually recommend a decision to the full commission.